The personal touch
The accessibility of its top executives has been key to the continuing success of Nashville, Tenn.-based Steinhouse Supply. Lee Steinhouse, president of the family-owned wholesaling firm, will stress that personal touch in his role as incoming president of the Southern Wholesalers Association.
"Our claim to fame is there is always a Steinhouse at Steinhouse Supply," he says. He and his brothers, John Steinhouse, vice president/purchasing, and Jim Steinhouse, vice president/controller, have agreed to not allow all three to travel or have lunch together.
"One of us is in the office every day from 7:30 to 4:30," he says. "All three of our phone numbers are listed in the phone book and also listed as emergency numbers for the business. Our customers know they can always reach a decision maker immediately and resolve any problem from the smallest to the largest."
As the new SWA president, Steinhouse consented to an interview in which he shared his history in the business, the evolution of his company and his outlook for the industry and SWA with the readers of Supply House Times.
Q: How did you start in the PHCP wholesaling business?
Steinhouse: My father, Leroy Steinhouse, started the business in 1962 with the help of my mother, Pat Steinhouse, as an electrical, plumbing and industrial supply house. I started in the business at age 12, sweeping floors and putting up stock on Saturdays and during summer vacations. I?ve done every job in the business: warehouse worker, truck driver, counterman, accountant, salesman, general manager. I took over as president in 1983. My mother is chairman of the board but is not active day-to-day. My father retired in 1992 and died in 1997. I have retained one large account as a salesman so I can keep a pulse on what is happening in the real world.
Q: Describe Steinhouse Supply today.
Steinhouse: We are now basically a plumbing and PVF wholesaler. We still have one location in Nashville. We have been at the same location for the past 36 years but it has been expanded several times. Today we have a 55,000-sq.-ft. warehouse/office and a 4-acre pipe yard. We have 30 employees. Our company serves Nashville and neighboring communities within about a 75-mile radius. We are still a fairly small independent wholesaling firm. We have carved out a position in our market and have made a reasonable living for ourselves and our employees.
Q: What is your company's niche?
Steinhouse: Starting in the 1970s our niche was industrial plastic pipe, valves and fittings. We introduced industrial plastics to this market and sold it throughout the Southeast. Competitors bought from us because they knew we had the stock and expertise. Today PVC and CPVC products have become commodity items. Competition has increased and margins have eroded, but this area still represents a major part of our business. Over the past 10 years we have developed another niche, the commercial new construction market. We deal with eight or 10 medium-to-large mechanical contractors in our area who work on new commercial construction such as office buildings, hospitals and health care facilities, prisons, hotels and warehouses. This can be a very competitive market, but we work hard at giving good service. We also sell the fixtures and accessories.
Q: What competition does your company face?
Steinhouse: Consolidation in our industry has affected us. The large chains often have a price advantage. We have six major competitors in Nashville, but only one is locally owned. We constantly tell our customers, most of whom are local businessmen, about the advantages of dealing with a locally owned company.
Q: How do you stay competitive?
Steinhouse: We provide a personal touch that the big chains cannot. Another competitive advantage we have is our employees. Three key employees have been with Steinhouse Supply for 25 years or longer. Between those three people and my brothers and I, we have a wealth of knowledge and experience to offer.
We still look for opportunities to provide value-added services. We do not pursue tract-housing jobs or government projects where price will be the deciding factor. We emphasize good communication and train our employees so they can help our customers solve problems.
We have kept up with technology by adding the latest updates to our Prophet 21 computer system, which is used throughout the business for all functions. Recently we joined the Omni buying group to help us with competitive pricing.
Q: How has your business and the PHCP industry changed in recent years?
Steinhouse: Our customer base has changed over the years. We do not have the industrial plant customers we used to have. Many of the large industrials have gone to the integrated supply system, although I see this breaking up. The integrated supplier is often a clerk who knows nothing about the product he is selling.
Also, the do-it-yourself trade we once had has gone to the large home centers. However, we never really solicited that trade because we were not geared for that business.
The major changes in the PHCP industry over the last 30 years involve the consolidation of the major chains and the integrated supply systems. But thank goodness, this is still a people business. I see Steinhouse Supply and similar family-owned wholesalers continuing as active, viable businesses through my generation for the next 20 years. I cannot project for the next generation if our model will still work as the industry consolidates.
Q: How do you perceive SWA today?
Steinhouse: SWA remains a strong organization that fulfills a need in our industry. It has a strong financial base and is very active. We have lost membership due to consolidation over the last few years but still have about 100 home offices, ranging from the $1 million dollar per year wholesaler to the three largest publicly owned industry giants with annual sales exceeding $3 billion dollars. More than 80% of our members have sales less than $15 million per year, which gives us a broad-based membership.
SWA has a large core base of members who are willing to participate. More than 50% of our members are represented at our annual spring convention. That has to be one of the largest percentage rates of participation of any voluntary industry organization. SWA has not changed greatly over the last 20 years. It has remained stable under the outstanding leadership of Executive Vice President Frank Rizzo.
Q: How would you sell a wholesaler on the benefits of joining SWA?
Steinhouse: I would stress the networking opportunities SWA provides, both with competitors and vendors, and the educational programs we offer to train our members and their employees. Through SWA I have made lasting friendships with some of my competitors. They are not all "bad guys." This makes business more fun instead of a war.
Also through SWA I have become acquainted with the top management of my major vendors. Educational opportunities include programs at the annual convention, a regional workshop presented at four southern cities on a timely subject each year, an annual three-day "Profit Enhancement" Institute, and newsletters and updates on relevant industry issues.
Q: What will be your primary focus as SWA president?
Steinhouse: My major goal as the new SWA president will be to keep everyone involved. We have been fortunate to have companies of all sizes as active members. I want to keep the major chains involved in our organization as well as the smallest wholesalers. The top executives of three of our industry's largest wholesalers -- Lloyd Noland of Noland, Charlie Banks of Ferguson, and Stewart Hall of Hughes Supply -- have served as president of SWA over the past 10 years. They have been among our most effective leaders. I will strive to keep these large companies involved in SWA for the improvement of our industry, but I also want to keep the small- and medium-size wholesalers involved. You get out of something what you put into it.
Q: How are relations between the regionals and the American Supply Association?
Steinhouse: It is no secret that there have been some strained relationships between ASA and some of the regional associations over the last few years. I was opposed to the original White Paper, which would have stripped the regional organizations such as SWA of most of their independence. SWA has a 74-year tradition. I congratulate the ASA leadership and staff for working out a compromise. The first proposal tried to do too much at one time. I am not so na? as to say no further consolidation might be necessary in the future, but the proper thing was done last year. Maybe one national organization will be appropriate in the future, but today SWA is a viable organization that serves its purpose well. Over the past year I have seen signs of ASA and the regionals working more closely together, which is necessary for all to have success.
Q: Any concluding remarks?
Steinhouse: I hope all of the surviving regional associations can become as strong and active as SWA. We have remained strong because of our active members. It has definitely been to our advantage to have the three largest wholesalers active in our organization. Our annual spring convention held at a nice resort in Florida in March is a big attraction both to the owner/operators of our member firms and the top executives (presidents and vice presidents) of the largest plumbing manufacturers in our industry. These vendors might send a regional sales manager to another regional convention at a less attractive time or location. I see SWA as a very strong organization for the foreseeable future. It serves a valuable function to the wholesaler who participates.